John Lewis Exits Build to Rent: What London Landlords Need to Know

What Has Happened?

John Lewis Partnership, a major institutional investor in the UK private rental sector, has announced its withdrawal from the Build to Rent (BTR) market. After investing approximately £500 million in BTR homes and securing planning approvals for new developments, the company is now closing its rental property division. This decision stems largely from changed financial conditions, notably rising construction inflation and borrowing costs.

Though John Lewis will honour existing property management contracts at its four BTR locations — Leeds, Birmingham, Leicester, and Stratford — the business is entering a responsible wind-down phase.

Why This Matters to London Landlords

While John Lewis’s BTR developments are outside London, the exit of a major institutional player signals wider market pressures that could affect landlords across the capital:

• Market Dynamics: The withdrawal may reduce institutional investment appetite in BTR, potentially slowing new supply growth. London landlords could see less competitive pressure from large-scale BTR operators in some areas.

• Rental Supply Impact: Although John Lewis’s managed sites are outside London, localised effects on rental supply might emerge if similar investors reassess projects due to inflation and borrowing costs.

• Funding Environment: Rising borrowing costs and construction inflation are not unique to John Lewis. Landlords planning development or refurbishment projects in London must factor these into financial forecasting.

• Tenant Demand: BTR schemes often offer professionally managed, amenity-rich homes appealing to certain tenant demographics. A slowdown in BTR could shift demand patterns, influencing landlord strategies.

Practical Implications by Landlord Profile

• Single-Unit Landlords: While less directly impacted, single-property owners should monitor changes in local rental supply and demand, which may affect rents and occupancy.

• HMO Landlords: HMOs often compete with BTR for tenants. A slowdown in BTR supply might ease competition, but rising costs can affect maintenance and compliance budgets.

• Portfolio Landlords and Developers: Those involved in BTR or planning development must reassess project viability amid inflation and borrowing cost rises. Pausing or scaling back projects might be prudent.

• Accidental Landlords: This group should be aware that market shifts may indirectly influence tenant turnover and rental income stability.

Recommended Next Steps for London Landlords

1. Review Financial Models: Update budget and cash flow projections to incorporate current construction inflation and borrowing rates.

2. Assess Development Plans: Landlords with ongoing or planned developments should consult financial advisors or lenders to evaluate feasibility.

3. Engage with Letting Agents: Discuss possible impacts on rental demand and supply, especially if your property competes with BTR schemes.

4. Monitor Local Market: Keep an eye on rental price trends and supply changes in your borough or neighbourhood.

5. Verify Investment Opportunities: If considering partnership or investment in BTR projects, confirm details with official sources due to recent market volatility.

6. Plan Tenant Communication: Prepare to explain any operational changes if your tenants inquire about market conditions or rental trends.

How Rentals & Sales Can Support You

Our team offers tailored portfolio reviews and compliance audits to help you navigate this shifting landscape. We provide up-to-date pricing strategies that reflect current market realities and advise on operational workflows to optimise tenant retention and cash flow.

Contact us to arrange a consultation that fits your landlord profile and objectives.

Compliance Disclaimer: This article is for informational purposes only and does not constitute financial or legal advice. Landlords should consult qualified professionals before making investment decisions.